This post will discuss the new tax act that took effect in July 2025 — the One Big Beautiful Bill (OBBB) Act.
This legislation made several provisions from the Tax Cuts and Jobs Act of 2017 permanent, and it introduced a few new rules that could affect individuals and businesses.
Key Permanent Changes:
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Estate Tax Exemption: Now permanently set at $15 million per person, or $30 million for married couples.
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Bonus Depreciation: 100% bonus depreciation is now permanent, starting January 19, 2025.
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Qualified Business Income (QBI) Deduction: This deduction is now permanently available for S Corporations and partnerships.
New Provisions in the OBBB Act:
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Auto Interest Deduction: Up to $10,000 annually, but only for new vehicles. The deduction begins phasing out at $100,000 of income.
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Tax-Free Tips: Workers in traditionally tipped jobs can now receive up to $25,000 in tax-free tips per year.
Family and Individual Adjustments:
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Child Tax Credit: Increased by $200 per year.
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Senior Deduction: Taxpayers age 65 or older can now claim a $6,000 deduction.
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SALT Deduction: The cap on state and local tax deductions has been raised to $40,000 annually for taxpayers with income below $500,000. This includes state income, local income, and real estate taxes.
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Educator Expenses: Starting in 2026, educator expenses will become an itemized deduction.
Additional Changes:
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Children’s Savings Accounts: For children born between 2025 and 2028, the government will deposit $1,000 into a new savings account. Families can begin making contributions in July 2026.
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Energy Credits: Energy-efficient home improvement credits, along with other related incentives, will expire this year.
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Pass-Through Entity Loss Limitation: Now permanent. Losses are capped at $626,000 for joint filers and $313,000 for single filers.
If you’d like to learn how the OBBB Act might impact your personal tax situation, feel free to contact our office.
